It's a no-brainer: Payday lending bill shouldn't be passed in Senate

As the old adage goes, you can put lipstick on a pig, but it’s still a pig.

House Bill 2191, to legalize payday lending in Pennsylvania, is a foul piece of legislation no matter how proponents try to disguise it.

Payday lending is advertised as a way to get quick cash. You simply borrow a bit from your next paycheck. It’s easy.

But there’s a big catch: dangerously high interest rates. Typically, those rates are at least 300 percent.

It’s hard enough these days for middle-class families to pay their mortgages, car payments and college loans — all at far lower interest rates than 300 percent. It doesn’t take a genius to figure out that low-income people are unlikely to be able to pay back such excessive interest.

That’s exactly what payday loan companies want. Their entire business model is predicated on luring people in and then making it so they get caught in a debt trap when they can’t pay the loan back with their next paycheck.

“Payday loans are sold as two-week credit products that provide fast cash, but borrowers are actually indebted for an average of five months per year,” concludes a Pew research report on payday loans that came out this summer.

Proponents of the payday loan bill have tried to dress it up in many ways — as a form of job creation or even as consumer protection because it would regulate the industry — but the bottom line is it would legalize predatory lending.

The bill might be taken up by the Senate this week and any senator who votes for it is voting to put more seniors and low-income workers into poverty.

The U.S. military saw how this kind of lending destroyed families.

A Department of Defense report analyzed various regulatory options — similar to what Pennsylvania is now considering — and concluded they are merely “bells and whistles [that] do not stop the debt trap.”

It found the only safe course of action was to ban loans of more than 36 percent interest to military families. President George W. Bush signed the Military Lending Act in 2007 to enforce that cap.

This should be a no-brainer “no” vote by the Senate.

The fact that this bill even got this far — it passed the House in the spring — is testament to the grip that certain private interests (and dollars) have on our lawmakers.

It’s sickening.

Rep. Chris Ross, R-Chester, the main sponsor of the measure, put up a straw man argument that Pennsylvanians are getting payday loans online, so it should be regulated.

Balderdash.

The Pew report found that states such as ours that outlaw all predatory lending have low instances of online loans.

Individuals who work with low-income families are not seeing many online loans either. Groups such as the United Way, AARP and veterans are against HB 2191.
They know it will bring nothing but hardship.

Furthermore, the state Supreme Court in 2010 unanimously ruled against Cash America, a large payday loan operator that was trying to do online business in the state.

The law is clear at the moment: No loans above 24 percent interest can be made to Pennsylvanians.

How do people in need in this state get money? As the Pew study found, they do what any rational person would do.

They cut back on expenses, sell personal possessions, look to friends and family for help or hold off on paying bills.

It’s not a great situation to be in, but it’s a heck of a lot better than being in debt to some big corporation that wants to milk you for what little you’re worth.

Next week, Pennsylvanians will find out exactly who our lawmakers have at heart: predatory lending bosses or the people of this commonwealth.